Canada’s dramatic escalation of defense spending commitments is setting the stage for a windfall among select Toronto Stock Exchange-listed companies, as Ottawa races to meet new NATO targets while simultaneously addressing longstanding gaps in military readiness and Arctic sovereignty.
At the 2025 NATO Summit in The Hague, Prime Minister Mark Carney announced that Canada would join its allies in committing to spend 5% of GDP on defense and security-related expenditures by 2035 — including 3.5% for core military capabilities and 1.5% for defense-related infrastructure. This represents a massive acceleration from Canada’s current spending level of approximately 1.45% of GDP and builds on previous commitments to reach 2% by 2032.
The government’s Our North, Strong and Free defense policy, released in April 2024, outlined $8.1 billion in new defense spending over five years and $73 billion over the next two decades. Combined with accelerated procurement timelines and the integration of the Coast Guard into military operations, these investments are expected to channel unprecedented sums into aerospace, defense technology, engineering, and critical infrastructure sectors.
Companies Poised to Benefit
Several Canadian firms appear strategically positioned to capture substantial contracts as Ottawa’s spending ramps up:
AtkinsRéalis Group Inc. (ATRL:TSX), formerly SNC-Lavalin, brings decades of expertise in large-scale engineering, project management, and defense infrastructure. The company’s focus on high-margin, recurring service contracts and its recent financial turnaround align well with government infrastructure ambitions, particularly in military base modernization and public-private partnerships.
Bombardier Inc. (BBD-B:TSX) has already seen its share price more than double this year on strong demand for business jets. As defense spending increases, the company could secure additional military aviation contracts, maintenance services, and defense logistics integration work, building on its aerospace manufacturing capabilities.
Cameco Corp. (CCO:TSX), one of the world’s leading uranium producers, stands to benefit from the intersection of defense and energy security strategies. With nuclear power playing an increasingly critical role in Canada’s energy independence and critical minerals strategy, Cameco’s uranium supply business takes on strategic significance for both civilian and potential defense energy applications.
Kraken Robotics Inc. (PNG:TSXV), though smaller and more speculative, produces subsea sensors, batteries, and robotic systems used in underwater surveillance and naval operations. With Canada focusing intensely on Arctic sovereignty and maritime defense, Kraken appears well-positioned for government and allied contracts in underwater intelligence and reconnaissance.
Stantec Inc. (STN:TSX) and WSP Global Inc. (WSP:TSX), two of Canada’s premier global engineering and design firms, are expected to see increased demand for project management, environmental assessment, and construction oversight tied to defense installations, transportation corridors, and energy infrastructure. Both maintain robust order books and strong earnings visibility.
Toromont Industries Ltd. (TIH:TSX), a leading provider of heavy machinery and equipment, stands to benefit from increased military infrastructure projects, roadbuilding, and equipment modernization. The company’s exposure to cyclical industrial demand and healthy balance sheet make it an attractive play on Canada’s renewed capital investment cycle.
Critical Minerals and National Security: A Strategic Imperative
Beyond immediate defense contracts, Canada’s spending surge intersects critically with its broader Critical Minerals Strategy, launched in December 2022. This convergence raises fundamental questions about economic sovereignty and national security in an era of intensifying great power competition.
Canada has identified 31 critical minerals — including uranium, lithium, nickel, copper, rare earth elements, and tungsten — as essential to economic and national security. These materials are indispensable for defense applications ranging from advanced electronics and precision-guided munitions to nuclear submarines and next-generation fighter aircraft. Yet global supply chains remain dangerously concentrated, with China controlling 68% of rare earth element production and 90% of processing capacity as of 2022.
This concentration creates acute vulnerabilities. As the Center for Strategic and International Studies notes, “China’s near monopolistic control of many critical minerals, which are essential for both consumer products and defense production, represents an unacceptable risk to the national security of the United States” — and by extension, its closest allies including Canada.
For Canada, retaining control over domestic critical mineral resources isn’t merely an economic opportunity; it’s a national security imperative. The country is already a leading global producer of many critical minerals, including uranium (via Cameco), nickel, potash, and aluminum. But developing full domestic value chains — from extraction through processing to manufacturing — requires the kind of sustained, large-scale investment that defense spending can anchor.
Ottawa has taken steps to protect these strategic assets. In November 2022, the government ordered three Chinese state-connected entities to divest from Canadian lithium projects, and subsequently issued guidelines discouraging foreign state-owned enterprise investment in the critical minerals sector. More recently, the government has used Investment Canada Act national security reviews to scrutinize — and in some cases block — foreign acquisitions of Canadian mining assets.
Yet preserving access to critical minerals requires more than defensive measures. It demands proactive industrial policy that develops mining, refining, and manufacturing capacity at home. Defense procurement can serve this purpose by creating guaranteed demand for domestically-sourced materials, underwriting the economics of new mines and processing facilities that might otherwise struggle to attract commercial financing.
The U.S.-Canada Joint Action Plan on Critical Minerals, signed during the first Trump administration, provides a framework for cooperation, and the U.S. has already invested more than $70 million in Canadian critical minerals projects under the Defense Production Act. Recent examples include a $15.8 million Pentagon grant for rare earth element development and $15 million for a tungsten project in New Brunswick.
These investments recognize a fundamental reality: North American defense industrial capacity depends on secure access to critical minerals. As CSIS researchers argue, “Canada is accordingly a prime target for a U.S. minerals strategy that aims to boost domestic mining and refining while partnering with allies to weaken China’s dominance.”
Execution Risks and Timeline Uncertainty
While the long-term outlook appears favorable for defense and industrial contractors, significant execution risks remain. Canada’s procurement system has historically struggled with delays, cost overruns, and lapsed appropriations. The Parliamentary Budget Office has already applied a 25% discount to government forecasts for major equipment spending due to “high likelihood of delays.”
Meeting the 5% GDP target by 2035 will require military expenditures to reach approximately $82 billion annually — nearly double current levels. Achieving this while maintaining fiscal sustainability and avoiding waste will demand, as defense experts note, “substantial and significant change in the way the Government of Canada operates when it comes to approving the injection of resources.”
Infrastructure projects similarly face permitting bottlenecks, environmental assessments, and consultation requirements with Indigenous communities. The Office of the Auditor General has warned that Natural Resources Canada lacks robust enough risk analysis and environmental impact assessment processes to manage the anticipated surge in critical mineral mining activities.
Looking Ahead
Despite these challenges, Ottawa’s renewed commitment to defense and infrastructure spending represents a generational shift in Canadian industrial policy. The combination of military modernization, Arctic sovereignty investments, critical mineral development, and defense-related infrastructure creates a multi-decade tailwind for companies with the right capabilities and positioning.
Companies like AtkinsRéalis, Bombardier, Kraken Robotics, and WSP Global appear well-positioned to capture meaningful shares of this investment wave. Cameco’s role becomes particularly strategic as uranium emerges as a critical mineral at the intersection of energy security and defense needs.
More broadly, Canada’s approach to critical minerals will serve as a test case for whether Western democracies can build resilient, domestically-anchored supply chains for materials essential to both economic prosperity and military capability. In an era of renewed great power competition, the ability to secure these resources without dependence on geopolitical rivals may prove as important as any weapons system.
As government contracts and infrastructure approvals translate into revenue growth through 2026 and beyond, investors and policymakers alike will be watching closely to see whether Canada can execute on its ambitious vision — and whether control over critical minerals truly becomes the strategic advantage that national security experts believe it can be.
